Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation

49 Pages Posted: 20 Jul 2005

See all articles by Jörn-Steffen Pischke

Jörn-Steffen Pischke

London School of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Till von Wachter

Columbia University - Columbia Business School, Economics; IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 2005

Abstract

We estimate the impact of compulsory schooling on earnings using the changes in compulsory schooling laws for secondary schools in West German states during the period from 1948 to 1970. While our research design is very similar to studies for various other countries, we find very different estimates of the returns. Most estimates in the literature indicate returns in the range of 10 to 15 percent. We find no return to compulsory schooling in Germany in terms of higher wages. We investigate whether this is due to labor market institutions or the existence of the apprenticeship training system in Germany, but find no evidence for these explanations. We conjecture that the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in Germany than in other countries.

Keywords: human capital, returns to schooling, school leaving age, ability bias

JEL Classification: I21, J24, J31

Suggested Citation

Pischke, Jörn-Steffen (Steve) and von Wachter, Till, Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation (July 2005). Available at SSRN: https://ssrn.com/abstract=757104 or http://dx.doi.org/10.2139/ssrn.757104

Jörn-Steffen (Steve) Pischke

London School of Economics ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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IZA Institute of Labor Economics

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Till Von Wachter (Contact Author)

Columbia University - Columbia Business School, Economics ( email )

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IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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